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Yes, Groupon is worth $25 billion

It's revolutionized commerce and could IPO for more than Google. Why? Because it's a game-changer

Financial trends and news by Faith Merino
March 18, 2011
Short URL: http://vator.tv/n/1854

Groupon's rumored $25 billion IPO gives us all a lot to think about. Is the two-year-old company really worth that much? Could we be on the verge of a new Web bubble? Does Andrew Mason have a girlfriend?

Reports emerged Thursday that the company is looking at going public this year for up to $25 billion, according to people familiar with the matter. If the company does indeed go public at a $25 billion valuation, it will set a record as the largest VC-backed IPO in history, according to Dow Jones VentureSource. It will edge its way ever-so-slightly above Google's $24.6 billion IPO back in 2004. 

Even if it goes public for the $15 billion previously reported, it will still join an elite club of companies that have gone public at valuations exceeding $10 billion, which includes Huatai Securities Co., from Nanjing, China, which went public in 2010 for $16.4 billion; Corvis, from Columbia, MD, which went public at a valuation of $14.2 billion in 2000; and Sinovel Wind Group, from Beijing, which went public in 2011 for $13.7 billion. 

In January, Groupon raised a $950 million round of financing that put it in another elite group: companies who have raised funds in record-setting rounds. At the time of its fundraising round, Groupon was the record-breaker with Dreamworks' 1995 $500 million round as the number to beat. Facebook quickly followed up with a $1.5 billion round of its own for a $60 billion valuation.

So all of this begs the question, is Groupon worth more than Google, Dreamworks (which went public in 2004 for $812 million), Huatai, Corvis, and Sinovel Wind? It's not really fair to compare the companies based purely on IPO valuation, but it's unavoidable. 

Ultimately, though, the answer is yes. Groupon has proven itself to be a game-changer (if an easily copied one, but it's working on that) and it has a lot going for it. It's growth alone is cause for celebration. Its subscriber base now stands at 70 million--fully 60% more than what it had when Google offered to buy Groupon for $6 billion only three months ago. Groupon's valuation has tripled in three months. 

Between 2009 and 2010 alone, Groupon's subscriber base grew 2,500% from two million to 50 million. Its headcount has doubled in three months to 6,000, up from 3,000 in December, and these days the company is serving up no less than 950 deals per day around the world. 

But the company isn't just expanding, it's innovating. Word got out on Thursday that Groupon plans to debut a new mobile app called Groupon Now that will serve up hourly deals so that consumers can get immediately available discounts around the clock, wherever they are. This is what really proves Groupon's worth. No longer will it be one of hundreds of daily deal sites, distinguishable only by its quirky humor. Now, it has the tech foundation to really shoot it out of the water.

So in sum, yes. Groupon is worth $25 billion. 

Image source: groupon.com


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